I first saw Emigrant Direct on Yahoo.com; they had a big splash ad, touting 3.0% (currently 4.50%), and America’s Highest Rate. I definitely clicked on the ad since that was an awesome rate at the time (6/2005).

They’re pretty much similar to ING Direct (review here), which I have been using for awhile now.

No fees and no minimum sounds great.  I was curious, so I decided to sign-up, take a look at how their site function and how well they perform.

That’s about as far as I got with Emigrant Direct’s American Dream Savings Account™

I tried about 3 times to sign-up through their online application. For some reason, they just couldn’t get me setup. Basically, after filling all necessary information, Emigrant Direct ask you a series of security questions to confirm your idea, questions much similar to those that you find when you request for your credit report/history.

At this age, I did not have any mortgage loans; so I put no to some of the questions asked. Long story short, they can’t seem to verify me, so needless to say, I couldn’t open the account online. (Yes, I answered all the questions correctly, I think I’ll remember what street I use to live on, or didn’t live on before)

My attempt to setup their account didn’t stop there, of course. I figure no big deal, they just started and it’s normal to have some software glitches. (Although software glitches + online banking that keeps your money = not a good idea).

I tried another 3 times to sign up the account thru the phone. First attempt ~15 minute wait on the phone, customer service rep. that took my name, address… put me on hold… and I got disconnected.

Second attempt, waited another 10 minute or so, I figure okay, maybe they’re busy now… (It was around 12 PM PST) so I’ll try another day.

Third attempt, a few days later… same results as FIRST ATTEMPT. What gives? Why is it so difficult for me to GIVE them my money? Guess they don’t want my service.

At this point, I decided to try again a few days later, they just started and they may be swamped with new customer sign up, but I sure wish it was an easier experience.

It wasn’t until I did more research, and more information started to surface on Emigrant Direct that I decided to not get an account with them.

What kind of review is this if you haven’t even tried their service!?

Well, it’s a brief one *cough*

There’s plenty of other source out there for customer reviews, and one of the massive source of information from other consumer is FatWallet.com’s Finance Forum.

At FatWallet’s forum, there’s an incredibly long thread on the topic of Emigrant Direct. You can view the thread here.

It has over 1,000 post, and currently its 55 pages long. Quite a lot of reading.

So I’ll give you some brief low down on what I’ve read.

Their rates are indeed highest at that time, which was 3.0%… the competition was heating up, and when other banks (ING Direct, Virtual Bank, etc.) bumped their rate up, Emigrant Direct promptly went up with their rate too. (As of 2/1/06, their APY is 4.25%)

Emigrant Direct is also committed to offer their rate at 3.50% till the end of 2005. Base on market condition, the rate may even increase (it did).

Their service could be better. There is obviously some flaw to the sign up procedures, as I was NOT the only one that has issues with signing up online. For an online savings account, the sign up procedure does require some snail mail.

Jonathan at MyMoneyBlog has a short review of Emigrant Direct at his site, which covers a good deal on the account setup procedure of Emigrant Direct’s American Dream Savings Account. You can check it out here.

If you read Jonathan’s review, you’ll see that setting up the account requires you to wait for the security deposits to be verified, and then you’ll need to wait for your Account Number to arrive via mail. The mail will be coming from New York, so the time it takes varies depending on your location. Although if you read through FatWallet’s discussion, you’ll see that some people had to request the account number mail a few times, as they never arrived.

Other not so pretty aspect of Emigrant Direct is the fact that many complained of slow and bad customer service. Besides the fact that their online site does not function properly, their customer service representatives was not too helpful too. In fact, there were some instances where they were extremely rude, and actually yelled at one of the customer! Yikes.

Many people have called ING Direct to initiate transfers to Emigrant Direct, but they were also told by the ING Direct rep that many people are experiencing bad customer service from Emigrant Direct, and are coming back to ING Direct. Obviously we can take the comments from the competition with a grain of salt, but the amounts of complaint in the FatWallet discussion forum is definitely something that shouldn’t be ignored.

Other problems such as transfers or initial deposits not showing up for a long time (past the normal 5-7 business day float times), or taking a long time to process are also a frequent complaint.

I have no doubt that Emigrant Direct will honor their rates, and they certain won’t take your money and run with it, as this is a regulated industry, not something like PayPal.

It’s just a bit troubling though; that users are experiencing problems accessing their accounts and their funds. I understand technical problems may be out of control initially, but one would think that they would have hired some competent programmers if they are going to be going into such a competing market.

At the end though, you’ll definitely have to make up your mind on how well Emigrant Direct performs. This is definitely something that requires the disclaimer of “your results may vary.” At times, people have their funds transferred and completed by the next day, and at times, their funds seem to take longer than necessary to clear.

I do have some tips though if you’re going to setup and try out an Emigrant Direct American Dream Savings Account.

When signing up, make sure you deposit a relatively small amount of initial deposit. As it seems that Emigrant Direct is quick in depositing your initial deposit, but slow in activating your account. So you may want to avoid some of the mistakes some people took, in jumping the gun and transferring a large sum of money just to have it sit around during float times.

You should also take note that they require you to have five security questions + answer filled out, incase you forget your account information. (Yes, five) So you might want to write those down during account setup process.

When you finally have your account setup, the transfer button would not be available for a few days, once your linked accounts are setup, they would magically appear a few days later.

Recently, Emigrant Direct also moved to stop receiving deposits by mail to cut down on cost. So unlike ING Direct, you can no longer send in your checks to deposit directly to your account. You’ll need to deposit them in your checking account that’s linked to Emigrant Direct, and then transfer it over online or on the phone.

I realized that that compared to my review on ING Direct, this isn’t such a favorable review for Emigrant Direct. But you should also note that I never had an account with them, and the only experiences I have are the ones listed above. If you’re considering Emigrant Direct’s American Dream Savings Account, you should definitely take the time to read the discussion thread at FatWallet.com, and draw your own conclusion.

Updated 7/21/05:
Here’s a good alternative to Emigrant Direct, HSBC’s Online Savings Account, currently also offering 3.75% APY.  I think I may open an account with them when they start offering opening bonuses.  Will write review on it when that happens.

Updated 7/22/05:
ED has bumped their rate up to 3.5% to offer a more competitive edge. That’s a pretty darn good rate, for a no minimum and no fee account. I’m tempted, but I’ll wait till they offer another promotion before I give them another try.

Updated 10/6/05:
ED has once again bump their rate up to 4.0%, now one of the highest no minimum, no fee savings/money market account out there.  Their offer is so competitive that I have decided to give them another try.  The application went through this time without a problem (looks like they fixed a few things), and I’m now waiting for further instruction via snail mail.

Updated 2/01/06:
I eventually got my ED account setup, and have been with them for about 3 months untill they closed my account without warning.  More details can be found here.

Here’s a good information page from MyMoneyBlog.  It contains detailed facts on Emigrant Direct’s American Dream Savings account, so you can easily compare them to other offerings.

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Sources:
Emigrant Direct’s Info Page
Emigrant Direct’s FAQ
FatWallet’s Finance Forum Discussion Thread
Jonathan’s Review of Emigrant Direct from MyMoneyBlog.com